Section 16 of the CGST Act, 2017 spells out the eligibility and conditions for availing the input tax credit. The Section 20 of IGST Act, 2017 provides for the applicability of various provisions of CGST Act, 2017 to the IGST Act, 2017 mutatis mutandis and by virtue of said section the provisions related to Input Tax Credit as spelt out in the CGST Act is made applicable to IGST Act, 2017.
The time limit to avail the ITC is provided for under sub-section (4) of section 16 of CGST Act, 2017. As per said section the time limit to avail the ITC is before filing of the GSTR-3B for the month of September of next financial year or Annual Return of the relevant financial year to which such invoice or debit note pertains whichever is earlier. The popular opinion around the industry is that in case of import of goods as well the said time limit would be applicable. In this article I would try to dissect the various provisions governing the time limit to avail the ITC with specific focus on the ITC on Import of Goods.
Before we proceed to discuss the technical part of the various provisions we should re-collect the basic principle and canon re-iterated time and again by various judicial fora that the legislature never waste its words and he knows what he writes and Expressio Unius Est Exclusio Alterius.
In the present context we must read Section 2(38), 2(66), 16(2)(a) and Section 16(4) of CGST Act, 2017 in order to apprehend the present issue. The abstract of relevant provisions are reproduced hereunder for ease of reference :
Section 2(38) “debit note” means a document issued by a registered person under sub section (3) of section 34;
Section 2(66) “invoice” or “tax invoice” means the tax invoice referred to in section 31;
Section 16(2)(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;
Section 16(4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or debit note pertains or furnishing of the relevant annual return, whichever is earlier :
Provided that the registered person shall be entitled to take input tax credit after the due date of furnishing of the return under section 39 for the month of September, 2018 till the due date of furnishing of the return under the said section for the month of March, 2019 in respect of any invoice or invoice relating to such debit note for supply of goods or services or both made during the financial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019.
On perusal of above provisions it could be observed that at one place of very same section i.e. (Section 16 of CGST Act, 2017) legislature takes a pain to mention “such other tax paying documents as may be prescribed” and by the time he reaches to the end of said section he left out the very same words i.e. “such other tax paying documents as may be prescribed”.
There is a view that Tax on Import of goods are governed by the IGST Act and that’s why the Section 16(4) of CGST Act, 2017 doesn’t contain Bill of entry specifically there which personally doesn’t float my interpretation ideology. Further it’s to be apprehended that Tax on Import of Goods flows from Custom Tariff Act, 1975 which I have discussed in later part of this discussion.
In that regard I would like to mention that the concept of Bill of Entry is not alien to the CGST Act, 2017. Under the CGST Act, 2017 the ITC of Tax paid on import of goods i.e. IGST is allowed and in that regard we can refer to the Section 2(62)(a) of CGST Act, 2017 which reads as
“input tax” in relation to a registered person, means the central tax, State tax, integrated tax or Union territory tax charged on any supply of goods or services or both made to him and includes –
(a) the integrated goods and services tax charged on import of goods;
(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;
(c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act;
(d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; or
(e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act, but does not include the tax paid under the composition levy;
and in order to allow such ITC under the CGST Act, 2017 the Section 16(2)(a) specifically make mention of the words “such other tax paying documents as may be prescribed” and accordingly list of such other tax paying documents are spelt out at Rule 36(1)(d) of CGST Rules, 2017 which contains the Bill of Entry or any similar documents as prescribe under the Customs Act, 1962 as one the documents eligible for availing the ITC.
Now let’s go to the Section 20(iv) of IGST Act, 2017 which provides that Subject to the provisions of IGST Act, 2017 and the rules made thereunder, the provisions of CGST Act, 2017 relating to Input Tax Credit shall, mutatis mutandis, apply, so far as may be, in relation to integrated tax as they apply in relation to central tax as if they are enacted under this Act.
Under this circumstances the concept of the word “mutatis mutandis” needs quite deliberation to determine whether in the context of Section 16(4) of CGST Act, 2017 the same could be modified by importing and adding a new word and read as “any invoice or debit note or bill of entry………”
The rule of mutatis mutandis is a rule of adaption and allow the changes according to the context in the point of details and alteration to the words when necessary to suit the objective.
However in the present context the word “Bill of Entry” itself holds an equal important under the CGST Act, 2017 and in spite of that fact the same have been ignored under Section 16(4) of CGST Act, 2017 which could be unintended drafting error but such errors could not be rectified in guise of mutatis mutandis under the IGST Act, 2017. The concept of mutatis mutandis cannot extend the scope and power beyond the one originally envisaged under the referred legislation. Section 20 of IGST Act, 2017 cannot get a better title than what is held by 16(4) of CGST Act, 2017.
Further the tax on import of goods is being levied under the Section 3(1) of Custom Tariff Act 1975. Let us review the levy under IGST Act, 2017 in the context of import of goods which reads as under ;
Section 5(1) of IGST Act, 2017 – Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person:
Provided that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962.
Now let’s review the Section 3(7) of the Custom Tariff Act, 1975 which reads as ;
Section 3(7) Any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent. as is leviable under section 5 of the Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section (8).”
If we would compare the same with Section 3(1) of Custom Tariff Act, 1975 which reads as ;
“Section 3(1) Any article which is imported into India shall, in addition, be liable to a duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article:”
then we would appreciate the fact that the very difference in both above provisions are that unlike Section 3(1) of Customs Tariff Act, 1975 the levy of IGST under Section 3(7) is itself a levy and not any equivalent to other taxes or duty.
So according to me and to the best of my understanding and knowledge the school of thought that the barriers of time limit for availing the ITC under Section 16(4) of CGST Act, 2017 doesn’t apply in case of Import of Goods for the very reason that same doesn’t find any mention therein.
This could be an unintended drafting error but that won’t change the consequences. In this regard I would like to quote Mr. Oliver Wendell Homes Jr former Chief Justice of Supreme Court of USA who once said in his court during one of the trial – “This is a Court of Law and not a Court of Justice”, which I believe to be in line with literal interpretation of law which may have harsh consequences on either side.
Author Bio
Sir,
The four conditions per S.16(2), GST Act starts with non obstante words, viz., “Notwithstanding anything contained in this section”, meaning thereby that it overrides the effects of all the sub-sections of section 16 per case Skill Lotto Solutions Pvt. Ltd. v. Union of India (2021) 35 J.K.Jain’s GST & VR 167 (SC). Therefore the time limit prescribed for Taking ITC u/s 16(4) is meaningless.
CA Om Prakash Jain s/o/ J.K.Jain, Jaipur
Tel 9414300730